Cash flow block holding back growing SMEs

28-Jun-2018

New figures from a new finance industry survey
have shown that restricted cash flow and lack of bank support are the top
challenges facing SMEs today – but that the majority of advisers would
recommend alternative finance to unlock the path to growth.

The survey of the UK's advisory professionals’
community by alternative finance specialists ThinCats showed that the single
biggest challenge facing small and medium-sized businesses in 2018 is
‘Restricted Cash Flow’, with 57% of respondents saying the companies they're
working with are being held back by a block on cash flow.

Looking a little deeper at the responses, it is
not hard to see why. The lack of support from the traditional banking sector
has emerged as a strong underlying cause with 49% of advisers confirming that
‘Banks Removing/Restricting Facilities’ continues to be a major problem,
polling above ‘Market Uncertainty’ at 46%.

In addition, 41% of participants in the survey
indicated that ‘Banks Not Lending’ is another critical issue facing businesses
today.

When asked 'In what situations would you
recommend alternative finance to your clients?' the survey showed why it is now
widely thought to be an accepted and highly-versatile source of funding.

Some 89% of respondents said they would
recommend alternative finance for funding growth, while 86% said they saw it as
an ideal option for refinancing and restructuring. Just behind these top two
came mergers and acquisitions (84%), management buy-outs and buy-ins (81) and
the provision of working capital (68%).

Damon Walford, chief development officer at
ThinCats, said:

"It is interesting to note that advisers consider all of
the above challenges as being of greater significance than that of ‘Late
Payment’ (19%), a key factor that has been viewed historically as a fundamental
and pressing concern

"For years now, SME owners have complained
that they can’t access their bank manager - and this naturally puts a block on
access to finance. It's now alternative finance providers are heralding the
return of a genuine, personal relationship with local business experts, who
invest their knowledge and time in their clients’ business growth (a role that
the banks have long since eschewed) to put their considerable expertise to good
use - supporting SMEs."